Worse Is Yet To Come?, page-1126

Thoughts only as there are many ways in which MGC could move and it depends on what commercial levers the current Board and Executive Team push or pull. To try and guess their medium to long term intentions would be a SWAG but here is my view based on the issues rather than the opportunities.

Review and consider changing the company constitution to move towards a full ASX listing, now whether that be MGC as a whole or whether they split the company into MGC (retain as the cooperative) and just list Devondale, Liddells and MGC Ingredients. If they did this then MGC would effectively become the processed (i.e. pasteurised milk supplier to the listed company for its own value adding activities to produce product-to-markets). Combined with this could be the removal of the Unit Trust and the STP.

Review and consider changing the product mix and continue to move into higher value product and await the ACCC's decision in regards the $1/litre contracts with the retailers. If it stays then MGC have to honour it if not then they have a choice as to whether to pursue that domestic commodity market or shift the released assets to greater value market, whether they be onshore or offshore.

There are some external matters which probably limit which way they want to play so not all of the forward looking strategies can be unfolded until (a) the ACCC Inquiry is done and dusted later this year, (b) the ACCC Investigation is done and dusted for MGC so it knows its exposure and obligations as a result, (c) ASIC Investigation is done and dusted for MGC so it knows its exposure and obligations as a result, (d) the Class Action is refined to the point of MGC knowing what impact this will have on its D&O insurance and what, if any, spill over there may be to the company.

So for now the last announcement really indicates where MGC is at and what it needs to do over the next 12 months to get itself stabilised and in a position to move forward in a positive manner whilst managing the impact to many staff and families as a result of the closures of the 3 plants and keeping the business afloat for current suppliers and unitholders.

So is MGC in crisis mode? Not really it is currently more about damage control and re-assessing what it has and what is left to do to close a rather tawdry chapter.

Not very useful and probably incomplete on many fronts I suppose but I don't have a crystal ball...